[Thread] Why 2024 is going to be a massive hit for the ecosystem?
As we bid farewell to the challenges of the past, let's delve into why 2024 is poised to be a game-changer for the Indian Startups! 🚀
In 2020, the world weathered the storm of COVID, followed by unprecedented quantitative easing. We then saw that in 2021 the bull run came soaring. Investors, fueled by the appetite for riskier assets led to a funding boom for startups as salaries soared.
Fast forward to 2022, and the music is about to stop. The realization that the Fed would hike rates to curb inflation means that funding is about to dry up as big money will be invested away into debt/T-Bills. Though demand remained robust, the stock market felt the impact as JPow raised the interest rates.
Late 2022 and 2023 saw the tech landscape experiencing layoffs, and startups facing significant headwinds. It’s a wonder if anyone raised this year.
But here's the twist—2024 looks brighter. The stock markets have rebounded to all-time highs, signaling that things may be on the rise. Despite geopolitical tensions in Ukraine and Iraq, the macro outlook for India shines bright.
For Indian Startups? VC Funding is still here to stay. So keep your heads down and keep building. From what I am hearing, it is set to make a roaring comeback. There is now significant rationality in the funding ecosystem leading to realistic valuations.
However, this revival will come with a plot twist. Newer companies, fueled by fresh funding, are set to rise, while most of the lofty valuations of those who raised in 2021 are about to crash and burn.
So buckle up folks. Let’s see where it takes us.
What do you think? 🤔
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The first crucible will be when the fundraise cohort of 2021/22 goes in for the next round of fund raise. These could be Series A/B/C.
Those renewed valuations will determine what comes next. Knowing what I know across B2B SaaS, there are going to be massive haircuts. B2C appears to be worse off.
Where there are deep haircuts, we'll see follow up layoffs. These have already happened in 2023 where founders are self-aware. The founders who continue to kick the can down the road, we'll see those come up for layoffs in 2024. It'll be ugly.
There is no funding winter. The smart VCs have enough powder that's been kept dry for the follow through rounds. It's just the flaky ideas that don't get early stage funding anymore.
Bang on. There has been a wide gap in terms of startups raising their next round. They will soon go and raise, and when that happens, we’ll know who’s been swimming naked
Agreed so much. It’s actually going to pan out exactly like this. Good ideas will get what it wants and bad ideas get nothing at all.
That's a very positive thought, and I do believe so as well. That said, there a couple of negative signals (Folks like Jamie Dimon calling out deeper recession in 2024, recent push to layoffs by not just startups but also a couple of big tech companies)
My bet is personally on second half of 2024 where we see things turning for better.
Jamie Dimon might be pulling down the prices before he gets in for the next bull run.
Its going to suck. Wfo will become more. Gen ai will eat into job market. Crap like ola and byjus will steal money from retails. Common man will get poorer and weaker as govt takes away more liberties while morons cheer them. Expect communalism to thrive as the majority of the country says where can't see it and no data will exist as most people live under the bubble of growth.
Good luck making any money in this country if you have this love of pessimism.
Graveyard, stressed asset consolidation, sector level write off by growth investors and most importantly a severe reduction in growth capital allocated to India. Returns profile of the country will have to demonstrate a 4-5x realisation and not mark up on a large cheque to attract growth capital.
Lot of seemingly large businesses will turn out to not be doing well, a great leading indicator is sub sectors which have seen stress sale or shut downs in 2023.
This is indeed a very interesting take.
There're talks in the markets that more FII funds are going to flow into India stack next year as they look to diverse away from China. They will wait for the elections to end before that, regardless of its results being an open secret. Maybe the VCs follow the same pack.
However a lot of it might also come down to the interest rates direction taken by the central banks including Fed. The global economy still needs to get back on growth mode to increase the quantum of these funds into India. Also needless to say, that profitability in terms of cash generating business models will be more in scrutiny now. I mean, end of the day profits ties up more into free cash flow than just top line revenue
Another thing to note is the rate of global geopolitical risks have gone up higher, and somehow has stayed that way ever since covid 2020. And this only means that supply driven inflation is not going away anytime soon. How this also plays into interest rates will be interesting to note.
@ValKilmer I agree with this mostly. This is what I am now slowly understanding about what is happening in the world right now.
2024 will be much better than 2023 as there are definite signals of FED doing rate cuts. Also the Ukraine- Russia is coming to its conclusion as most of the western powers are understanding the futility of a long drain war which is adversely affecting their own economies and with the number of elections in 2024 , everyone is looking for an respectful exit .
Moreover if BJP stays in power , which has like 80% chances, investors sentiment in Indian economy will be much more strong. This is evident from the recent bull run after BJP won the recent state elections.
@WhatsInAName I agree this through and through
Let's face the reality, 2024 atleast for all Indian startups is gonna be more harder than 2023.
Not all. Fresh works? Yes.
"As we bid farewell to the challenges of the past, let's delve into why 2024 is poised to be a game-changer for the Indian Startups! 🚀
"
This headline makes me think If this entire post was written using some AI
Dude I wrote like this all the time. Check some of my old thread posts out